Rush to beat health fund rebate cutoff

More than 100,000 high-income earners have rushed to delay the loss of their tax rebate for private health insurance, and insurers are bracing themselves for a last-minute flurry this weekend.

The means test that applies from midnight on Saturday will reduce the 30 per cent rebate for singles earning more than $84,000 and families on more than $168,000. The rebate will cut out altogether for incomes of above $130,001 for singles and $260,001 for families.

By buying a year’s worth of health insurance before July 1, those affected can hold onto the full rebate for at least one more year.

Singles on higher incomes can save hundreds of dollars by paying in advance. For families, the saving can be easily exceed $1000.

Budget papers suggest the government expects the new means test will trim the cost of the rebate from $4.95 billion in 2011-12 to $4.16 billion in 2012-13. This may have to be revised, given the many who have taken the prepay option. A conservative estimate suggests prepaying has clawed back $50 million of savings.

About 2 million health insurance members are thought to be affected by the test. Health insurers said they expected a rush of inquiries in the last week of the financial year but the volumes were such, they were still caught off guard.

NIB reported 20,000 of its 460,000 policyholders have paid in advance and the phones are still running hot.

“We normally get about 3000 calls a day. In the last two weeks we’ve averaged between 10,000 and 11,000," said NIB chief executive
Mark Fitzgibbon
. “We thought it would be a 20-year flood – it turned out to be 100-year flood."

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He said many NIB policyholders were self-funded retirees with financial advisers who had advocated the prepay option.

By mid-week, about 25,000 BUPA members had chosen to prepay. The health insurer will keep taking payments through its call centre up until midnight on Saturday and, like Medibank Private and HCF, will open retail outlets this Saturday to help cope with a late rush.

Medibank Private Health insurance group executive Laz Cotsios said the government-owned operation has put on an extra 30 staff in its call centres and extended trading hours.

Medibank expects between 30,000 and 40,000 of its 3.7 million members will prepay.

By last Wednesday, 27,362 HCF members had opted to prepay for the next financial year. That compares with just 3694 last year.

The insurer is mobilising d staff from head office to help man the phones and shop fronts over the weekend. Its call centre will operate until 8pm on Saturday.